Methodologies to Improve Economic and Vocational Analysis in Personal Injury Litigation

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1 Methodologies to Improve Economic and Vocational Analysis in Personal Injury Litigation Mark D. Cohen, M.S., C.E.A. and Thomas P. Yankowski, M.S., C.V.E. Part I: Contributions Vocational Experts Can Make in Determining Past and Future Lost Earning Capacity of Injured Workers 1. Introduction The calculation of past and future earning capacity by economic and vocational experts has a substantial impact upon the amount of compensatory damages recoverable in personal injury litigation. When determining reasonable vocational alternatives following injury, economic and vocational experts must be able to present options that are reasonable and persuasive to the jury. The intent of this article is to 1) provide an overview of lost earning capacity analysis, 2) describe the existing process that economists and vocational experts traditionally follow, and 3) most importantly, describe additional sources of pragmatic information to functionally define a plaintiffs abilities and disabilities - information that can greatly enhance the quality of economic and vocational analysis when evaluating lost earnings. 2. Valuation Overview Estimation of lost earnings in personal injury cases often requires the input of doctors, vocational experts and economists. Typically, doctors indicate the plaintiffs levels of physical disability. This information is utilized by vocational experts who recommend alternative jobs that plaintiffs may pursue if they are too disabled to continue in prior lines of employment. The vocational experts opinions are then incorporated into analyses of total lost earning capacity. The development of information regarding disability and its relation to vocational options therefore forms a significant part of lost earning evaluation. 3. Lost Stream of Income and Benefits Traditionally, evaluation of income and benefits had the accident not occurred is typically analyzed by economists without the assistance of doctors or vocational experts. The economist studies the worker s education and training, employment history and earnings. The economist will evaluate the state of the worker s industry, future employment Mark Cohen, M.S., C.E.A., is a Certified Earnings Analyst with the American Rehabilitation Economics Association. He has more than 11 years of experience analyzing and testifying in business, personal injury, wrongful discharge, and long-term disability cases. He is Chief Economist for Pacific Economic Consultants, Inc. in Lafayette, California, and an Adjunct Professor of Finance at Dominican College of San Rafael. Thomas P. Yankowski, MS., C. VE., is a Certified Vocational Evaluator and Diplomat with the American Board of Vocational Experts. He has more than 15 years experience testifying in personal injury, wrongful discharge, and long-term disability cases. He is President of the Center for Career Evaluations in Oakland, California, and an instructor at San Jose State University.

2 127 LITIGATION ECONOMICS DIGEST opportunities and expected earning rates had the accident not occurred. The economist will also make assumptions concerning the plaintiffs worklife expectancy. Yet some types of cases would be better served if vocational experts and economists consulted with one another to develop an estimate of lost income and benefits had the injury not occurred. Cases in which plaintiffs have pre-existing medical conditions, are minors, have limited work histories, or work histories and skill sets in obsolete vocations; benefit from vocational expert and economist consultation. A. Pre-Existing Medical Conditions In cases where the injured worker had a pre-existing disability or medical condition, the economist should question whether the worker would have been capable of continuing work in the pre-accident occupation. The economist should further question whether the plaintiff would have been able to continue working the same number of hours and schedule that had been established prior the accident. In such cases, a job analysis completed by a vocational specialist, followed by a physician s review of the worker s pre-existing condition in consideration of the job analysis, may be required to accurately assess the worker s prospects for income had the accident not occurred. B. Plaintiff is a Minor In cases where the accident occurred to a minor, physical and mental injuries may or may not have an impact on future earnings. The type of injury and limitations must be specifically considered by the economist when determining the potential loss of future earnings. In some cases, the physical injury may prohibit the child ~om working in certain occupations in the future. The child, however, may have other alternatives which are equally, if not more lucrative than the vocations no longer available to the child. In many cases, vocational experts may provide assistance to economists who seek to determine what the minor s earning capacity would have been had the subject accident not occurred. Such professionals may identify the specific occupational alternatives and expected future earning rates had the accident not occurred. The vocational experts identify the occupational alternatives through evaluation of pre-accident, and sometimes postaccident, interests, aptitudes and achievement of the minor. Family structure, socioeconomic background, education and earning capacity of parents may also provide additional insight into the minor s pre-accident vocational prospects. Pre-adolescent minors are a much greater challenge than those adolescents who have already established an observable school record, yet even they may often be tested for interest and aptitudes. C. Plaintiff With a Limited Work History In some cases, the injured party may not be able to furnish the economist with an established work history and record of earnings. For example, a 23 year-old woman who recently began work as a Certified Nursing Aide and contends that she would have become a Registered Nurse in the coming years would pose a challenge for the economist evaluating future lost earnings. A vocational expert may provide an economist assistance in determining whether this woman would have been successful in pursuit of a Registered Nurse credential. Again, analysis of the injured worker s school records and work history is important. The vocational expert can test her with respect to general learning ability, aptitude and interest

3 Cohen and Yankowski 128 which may provide additional information sufficient to provide a professional opinion regarding the plaintiffs probability of becoming a registered nurse. Furthermore, if one determines that the plaintiff would be successful as a registered nurse, the vocational expert can provide information to the economist regarding the expected length of job training, the cost of training, the lengths of job search expected, and the opportunity costs associated with pursuing RN training and job search. D. Pre-Accident Occupations That Would Have Been Abandoned In some instances, prior to the subject accident, workers f md themselves in occupations which are on their way to extinction. For example, typesetters, miners and some logging and milling occupations may no longer provide competitive employment opportunities in some parts of the country. In such cases, the vocational and economic experts must determine what the alternatives would have been once the injured party was forced to leave the pre-accident occupation. The worker s income and work history, transferable skills, age, interests, aptitudes and general learning ability should be assessed by the vocational expert. This information allows the professionals to conduct a labor market analysis and opine regarding expected vocational alternatives had the plaintiff not been injured. 4. Post-Accident Expected Stream of Income and Benefits Analysis of the present cash value stream of income and benefits that the plaintiff should earn given that the accident occurred typically requires the assistance of a medical and vocational expert. Doctors and vocational experts may coordinate if a question exists as to whether the plaintiff may return to the pre-accident occupation. The vocational specialist may develop a job analysis including physical capacity requirements for the doctor, who can then opine with authority regarding the plaintiffs ability to return to the prior job. Certain accommodations for the plaintiff, whether they be ergonomic in nature or alternative work duties, may be discussed between medical and vocational experts. The vocational expert may then conduct additional research if necessary and provide the economist with findings as to whether the plaintiff will be able to return to work, and at what level. A. Alternative Employment for Injured Workers In the event that plaintiffs do not have the capacity to return their pre-accident occupation, the medical specialist and vocational expert may coordinate regarding physical limitations. The vocational expert can then analyze the most appropriate alternatives for employment. Traditionally, the vocational expert provides the economist with information on the dates when alternative vocational exploration should begin, or should have begun. If necessary, the expert will also provide information on the most appropriate training programs for the plaintiff. This information should include the date training should begin, the cost of training, the date training should end, and the expected length of job search. In many instances, the vocational expert will research the expected starting earning rate and anticipated fringe benefits. Vocational experts may also indicate the number of years the worker can expect to work before reaching a mature earning rate, and the expected mature earning rate itself.

4 129 LITIGATION ECONOMICS DIGEST Part II: Improvements on Traditional Personal Injury Vocational Analysis 1. Traditional Personal Injury Vocational Analysis In order to provide the opinions necessary to develop an economic loss evaluation, in many cases a vocational analysis should be performed. The following procedural steps are typically followed by vocational experts in personal injury vocational analysis: 1) Review of records 6) Reasonable accommodation recommendations 2) Job analysis 7) Labor market assessments 3) Personal interview 8) Vocational plan recommendations 4) Vocational testing 9) Analysis of lost and fixture earning capacity 5) Transferable skills analysis 10) Analysis of job search activities This process, however, may exclude the critical element of determining Functional Job Capabilities that are within the plaintiffs residual limitations. Functional Job Capabilities are defined as the measurable work tasks that are required in an actual work environment. Functional Capacity Assessments and Vocational Evaluations are two resources which can provide an individualized and objective analysis of how the injury has affected a person s functional ability to perform the critical demands of a job. Functional Capacity Assessment & Vocational Evaluations are done by one or several professionals. Functional Capacity Assessments are conducted individually under the direct supervision of a qualified Work Capacity Specialist with a background in neuromuscular, cardiovascular, and bio-mechanical functioning, as well as vocational evaluation (VEWAA Standards. 1993). Vocational Evaluations are conducted by Vocational Rehabilitation Specialist with a background in job analysis, situational assessment, psychometric testing, and work sample administration. 2. Indicators for Functional Capacity Assessments A Functional Capacity Assessment can be the cornerstone in the development of expert testimony for personal injury cases. The expert s most critical judgment will be determining the impact of residual functional capacity upon the individual s past and future vocational options. A Functional Capacity Assessment is a systematic, objective evaluation of an individual s current functional physical capacities in work-related tasks. It provides a baseline of physical functioning in critical work performance areas as defined by the Department of Labor, such as lifting, carrying, pushing, pulling, kneeling, stooping, bending, gripping, climbing and dexterity. A Functional Capacity Assessment consists of approximately 3-4 hours of short-term, structured activities that measure critical work demands in a controlled setting. Four key issues emerge for medical and vocational experts when determining a plaintiffs residual work capacities. First, there is an important distinction to be established between the terms "medical impairment" and "vocational disability." The diagnosis of a medical impairment by a physician does not define the impact of the injury upon the individual s vocational alternatives. For example, a forklift driver with limited transferable skills who sustains a foot injury would have a more severe vocational disability than an accounts clerk with the same medical impairment. A Functional Capacity Assessment is often able to define the impact of the injury upon vocational options because the assessment is work-related. Even if physicians outline medical and physical restrictions, they (I) rarely

5 Cohen and Yankowski 130 functionally def me these limitations in terms of work and (2) rarely identify activities that the individual can perform in terms of work. A Functional Capacity Assessment can do both. One sample case involved a 34 year-old, journey-level carpenter receiving $22 per hour who sustained nerve damage to his left, non-dominant elbow. The injury resulted in decreased grip strength as he was unable to flex the interphalangeal joints of his 4th and 5th fingers on his left hand. One of the critical issues in dispute was whether he would be able to hold numerous nails and roll them with his left hand in order to hammer nails at a fast work pace. Labor market analysis indicated this job task was essential to be competitive as a construction carpenter. Time-motion studies were then performed during the Functional Capacity Assessment which determined that he could not perform the nail rolling activity at a professional pace. Possible job modifications were also determined to be unfeasible. However, additional functional testing was conducted involving driving and gear shift simulations which revealed he could perform forklift and truck driving activities. These alternative positions were ultimately offered to him by his employer at the same rate of pay he previously received. Second, the general work restrictions outlined by a doctor and used for a disability rating procedure can often be misleading or incomplete. The classic example is the person who is restricted to sedentary work by the doctor because they should not perform extensive walking or standing. However, the person s lifting capacity might be in the light or medium categories of physical demands as defined by the Department of Labor, which would greatly expand the number of vocational alternatives available. A Functional Capacity Assessment would specifically provide information about a person s lifting capacity under a variety of conditions. A person with a shoulder injury may not be able to lift overhead, but is able to lift 50 pounds to table height. Another person with a knee injury may not be able to lift from the floor level, but is able to lift 20 pounds overhead from the table height. Even if medical doctors have completed a standard Physical Capacity Evaluation Form, their opinions are not based upon actual performance testing unless a Functional Capacity Assessment was completed: A recent referral involved a roofer who had sustained severe bums to over 40 percent of his body when he fell down a flight of stairs onto a floor covered with hot tar. The treating physicians, who were burn specialists, listed his restrictions as "avoid exposure to chemical solvents and extremes in temperature." However, the doctors did not address his fimctional losses, particularly related to his hands which had undergone multiple skin graft operations. The Functional Capacity Assessment revealed the individual was more severely restricted. Additional functional limitations were identified in the critical job demands of heavy lifting, fme manipulations activities, ladder climbing, and forceful or repetitive gripping activities. Third, a Functional Capacity Assessment might be indicated when there are multiple medical opinions offered in the case, which is very common whenever there are opposing medical experts. As a general rule in these situations, various vocational plan alternatives are developed for each of the different medical restriction scenarios. It is not within the vocational or economic experts expertise to determine which medical opinion is most appropriate (Siefker, 1992). However, the results of a Functional Capacity Assessment could be added to the doctor s estimate of disability to provide new vocationally-oriented information that would clarify the injured party s vocational options, often in light of conflicting medical opinions.

6 131 LITIGATION ECONOMICS DIGEST Finally, a Functional Capacity Assessment might be very helpful when the injured party expresses subjective complaints not substantiated by objective findings. The person s perception of their disability frequently differs from actual performance exhibited during the Functional Capacity Assessment. It is critical for the Work Capacity Specialist to report only the physical signs and symptoms revealed in the Functional Capacity Assessment, as there is no truly reliable test for "motivation" (Isernhagen, 1988). However, a Work Capacity Specialist is able to identify consistency of effort through the variety and reproduction of tests administered. The standardized testing procedures may also result in "performance-based" substantiation of the injured party s perception of their level of impairment. The purpose of the assessment, therefore, is to accurately document the individual s physical abilities as well as limitations. Experts should have a working knowledge of the equipment, protocol, terminology, and techniques used when relying upon Functional Capacity Assessments. 3. Indicators for Vocational Evaluation Services Vocational Evaluation is another type of rehabilitation specialty which can enhance the study of economic losses. Vocational Evaluation is a comprehensive process that systematically uses real and/or simulated work to assess vocational skills, aptitudes, interests and work readiness (VEWAA Standards 1993). In addition to standardized vocational tests, procedures utilized may include work samples, simulated work activities, learning style assessments, and behavioral observations. The key component of Vocational Evaluation programs is the use of work samples and simulated job stations. These types of assessment instruments replicate the essential work factors and tools of a job as performed in industry. They have a distinct advantage over commonly used psychometric paper and pencil tests because they simulate the real work environment. They are particularly relevant in personal injury cases because they are based on industrial norms for comparison purposes, and the plaintiffs work behaviors can be personally observed and documented. Indicators when Vocational Evaluation services may be valuable to the expert are listed below: 1) Vocational feasibility assessment 2) Identify new vocational options 3) Transferable skills assessment 4) Learning style assessment 5) Identify possible employment barriers 6) Work behaviors assessment 7) Job modifications assessment 8) Extended physical tolerance assessment Complete Vocational Evaluations often develop a greater understanding of the plaintiff than traditional testing procedures. In fact, standardized vocational psychometric tests do not always accurately reflect the functional deficits or strengths that accompany the symptomology of many injuries. For example, one case involved a young woman with a minor head injury who had been declared "unemployable" by a neuropsychologist, based on an interview and administration of paper and pencil tests to the subject. However, a Vocational Specialist conducted a vocational evaluation which revealed additional information. Specifically, a variety of work samples including data entry, food preparation, and cashiering tasks were administered to the young woman. She was found to exhibit social interaction skills, positive work behaviors, and above average manual dexterity. She

7 Cohen and Yankowski 132 also demonstrated an ability to learn tasks that were not complex, but more routine in nature. After conducting a labor market survey, a vocational plan was recommended to prepare her for competitive employment as a food preparation worker following on-the job training and supported employment for six months. In addition to identifying additional capabilities, Vocational Evaluations may also discover additional deficits of the plaintiffs. Another case example involved a monolingual, Spanish-speaking farm worker who sustained injuries to his knee, low back, and dominant wrist. Functional testing of his lifting abilities, dexterities, and learning abilities revealed that he was not competitively employable as a result of his residual physical limitations, lack of transferable skills, and low functional academic skills. Assembly and packaging jobs were eliminated as possible vocational alternatives after he performed a variety of assembly work samples from a sedentary work position. These simulations resulted in edema and increased discomfort in his wrist. The case settled before trial, soon after completion of the vocational experts deposition testimony. An assessment of job modifications can also be critical to the development of viable vocational alternatives. On one case, a journey level carpenter had a severe crush injury to his dominant right hand. The vocational expert retained by the plaintiffs attorney reported the injured worker could perform only light cashiering jobs at a minimum wage salary in the future. During the Vocational Evaluation, however, the injured party demonstrated an ability to write legibly for an hour using a writing aid and an ability to input data on a computer. As a result, the defense vocational expert recommended a vocational training program for him to become a construction estimator with wages starting at $15 an hour. Using a simple ergonomic aide and a functional work sample test, the future earning capacity of the injured carpenter was significantly increased. 4. Work Hardening and Adjustment Programs A vocational or economic expert could also derive beneficial information from a Functional Capacity Assessment or Vocational Evaluation by using it as a source to recommend Work Hardening or Work Adjustment programs. These services are often recommended by professionals in the rehabilitation field for persons with chronic pain or emotional barriers to returning to work. They are highly structured, goal-oriented, individualized treatment programs designed to maximize a person s ability to return to work. Work simulation and conditioning activities are increased on a graduated basis to improve overall physical tolerances, stamina, productivity, and work behaviors (VEWAA Standards, 1993). A Functional Capacity Assessment provides a baseline of physical functioning which documents the rationale and recommended treatment plan for a Work Hardening Program. In personal injury cases, these programs may be particularly useful to recommend when the injured party claims to be totally disabled, has been unemployed for an extended period of time, or demonstrates an ability to improve work tolerances. On a recent case, the treating doctor set a 40 pound lifting restriction for the plaintiff. However, it was the opinion of the Work Capacity Specialist that the plaintiff could increase his lifting tolerances to 50 pound following a four-week Work Hardening Program. This analysis was confirmed with the Independent Medical Examiner, which allowed the expert to recommend an increased number of alternative jobs in the "medium level" category of physical demands. Vocational Evaluations enable the expert to develop treatment goals and time tables for

8 133 LITIGATION ECONOMICS DIGEST Work Adjustment Programs for individuals with cognitive or emotional impairments that preclude their return to work. Recently, a Vocational Evaluation was conducted of a person manifesting psychological problems relating to her work place. During the initial inlerview, she reported "no interest" in any. type of job because of her depression. Her psychiatrist stated she was incapacitated from performing her usual duties or returning to work in any capacity at the present time. There was no information obtained in the plaintiffs deposition regarding possible future work options. By the end of the six-hour Vocational Evaluation, she continued to express disinterest for clerical jobs that reminded her of previous employment. However, after completing a medical technician work sample, she indicated an openness to working with people in a hospital. This vocational exploration process, as well as the behavioral observations obtained during the program, allowed the expert to present a graduated vocational plan which included an appropriate amount of rehabilitation supportive counseling. These types of programs, therefore, may be part of a vocational plan recommended by the expert to provide a reasonable methodology for severely disabled individuals to return to work. 5. Conclusion Each lost earning evaluation is unique. Cases benefit from increased interaction between doctors, vocational experts and economists. Such professional dialogue promotes realistic and accurate assessments of earnings expected had the accident not occurred, and expected earning after the accident. Interdisciplinary consultation should be the trend in evaluating economic losses of plaintiffs. The expert s credibility as an independent and objective source of information can be enhanced by utilizing interdisciplinary examinations of the injured person s residual functional work capacities. Economic experts who do not possess sufficient training or background in vocational rehabilitation can recommend to the attorney that a rehabilitation specialist in this area be retained. Without sufficient information regarding the injured party s residual physical limitations and functional abilities to perform work, vocational and economic experts may be required to make assumptions which have insufficient basis for support. If the expert is retained by the plaintiffs attorney, the injured party can be directly referred to a vocational evaluation program for these types of assessments. Depending on state law, the plaintiff may not be required to submit to a defense vocational examination. However, the plaintiff s attorney often agrees to these evaluations in order to maintain all appearances of fairness. Certainly, if such an evaluation is requested and denied, a jury may make certain negative interpretations about the denial of access to the plaintiff. Functional Capacity Assessments and Vocational Evaluations can have a definitive role in the development of an opinion by a vocational or economic expert in personal injury litigation. These types of evaluations are perceived by the jury as both realistic and objective assessment procedures that simulate actual job demands. Experts who utilize these assessment programs will have a powerful source of documentation from which to base their opinion.

9 Cohen and Yankowski 134 A National Directory of Vocational Evaluation and Functional Capacity Assessment programs can be obtained from: Vocational Evaluation and Work Adjustment Association 202 E. Cheyenne Mountain Boulevard, Suite N Colorado Springs, CO References California Vocational Education and Work Adjustment Association (1993). Standards for Provisions of Vocational Evaluation. Assessment and Work AdJustment Services andtypes and Time Frames: Work Evaluation Services And Modules. California VEWAAStandards Committee. Corthell, David W. & Griswold, Peter P. (1987). "The Use of Vocational Evaluation in Vocational Rehabilitation. "Menomonie, WI: Research and Training Center, University of Wisconsin-Stout. Deutsch, Paul M. & Sawyer, Horace W. (1989). A Guide to Rehabilitation. New York, N.Y.: Matthew Bender & Co. Dillman, Everett. (1987). "The Necessary Economic and Vocational Interface in Personal Injury Cases. "Journal of Private Sector Rehabilitation, Vol. 2, No.3. Frasca, Ralph R. & Winger, Bernard 3. (1992). "The Americans with Disabilities Act of 1990: New Opportunities for Forensic Economists." Journal of Forensic Economics. 6(2) (pp ). Isernhagen, Susan 3. (1988). Work InJury/Management and Prevention. Gaithersburg, Maryland: Aspen Publishers. Male, Robert A. (1994). "Expert Orientation and Rehabilitation Economics." Presented at Western Economics Association International, 69th Annual Conference Meetings, Vancouver British Columbia. Martin, Gerald D. (1988). Determining Economic Damages. Santa Ma, California: James Publishing Group. May, Virgil R., III (1988). "Work Hardening and Work Capacity Evaluation. Def mition and Process; VocationalEvaluation and Work Adjustment Bulletin Vol.21, No.2 (pp.61-64). Shaft, Richard 5. (1992). Applying Career Development Theory to Counseling. Belmont, California: Brooks(Cole Publishing Co. Scheer, Steven J. (Ed.) (1991). Medical Perspectives in Vocational Assessment of Impaired Workers. Gaithersburg, MD: Aspen Publications. Scheer, Steven 3. (Ed.) (1990). Multidisciplinary Perspectives in Vocational Assessment of Impaired Workers. Rockville, MD: Aspen Publications. Seldon, James R. (1989). "Economists, Vocational Evaluators and Residual Employability:Piffalls in the Estimation of Future Income Losses." Journal of Forensic Economics. Vol. II, No.3. Sieficer, Judith M., (Ed.) (1992). Vocational Evaluation in Private Sector Rehabilitation. Menomonie, WI: University of Wisconsin-Stout. Stein, David B. -d.) (1993). Professional Issues: Ethics Methods and Roles of the Vocational Expert. Skokie, IL: American Board of Vocational Experts, Monograph #2. Vawter, Mark P. (1994). "How Vocational Experts Can Assist Forensic Economists in Civil

10 135 LITIGATION ECONOMICS DIGEST Litigation". Prepared for the Western Economics Association International, 69th Annual Conference of Meetings, Vancouver British Columbia. Williams, John M. & Maze, Marilyn E. (1994). Role of the Rehabilitation Expert in Administrative Law and Civil Proceedings. American College Testing Program.

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